Chapter 3 lecture

Debits 66000 equal credits 66000 2 the accounting

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Unformatted text preview: bilities + Cash Accounts Receivable +57,000 + 9,000 S tockholders' Equity Restaurant S ales Revenue (+R) (a) Cash (+A) [$36,000 + $21,000] Accounts Receivable (+A) Restaurant S ales Revenue (+R, +S E) Debit 57,000 9,000 Equality checks: 1. Debits $66,000 equal Credits $66,000, 2. The accounting equation is in balance. 28 Credit 66,000 +66,000 Analyzing Some of Papa John’s Transactions (b) The cost of the dough, sauce, cheese, and other supplies for the restaurant sales in (a) on the previous screen was $30,000. Assets S upplies = Liabilities + -30,000 (b) Cost of S ales (+E, -S E) S upplies (-A) S tockholders' Equity Cost of S ales (+E, -S E) Debit 30,000 Equality checks: 1. Debits $30,000 equal Credits $30,000, 2. The accounting equation is in balance. 29 Credit 30,000 -30,000 Analyzing Some of Papa John’s Transactions (c) Papa John’s sold new franchises for $400 cash, earning $100 immediately by performing services for franchisees; the rest will be earned over the next several months. Assets Cash = Liabilities +400 Unearned Franchise Fee +300 (c) Cash (+A) Franchise Fee Revenue (+R, +S E) Unearned Franchise Fees (+L ) + S tockholders' Equity Franchise Fee Revenue (+R) +100 Debit 400 Equality checks: 1. Debits $400 equal Credits $400, 2. The accounting equation is in balance. 30 Credit 100 300 Analyzing Some of Papa John’s Transactions (d) In January, Papa John’s paid $7,000 for utilities, repairs, and fuel for delivery vehicles, all considered general and administrative expenses incurred during the month. Assets = Liabilities + S tockholders' Equity Cash -7,000 General & Administrative Expenses (+E) -7,000 (d) General & Administrative Expenses (+E, -S E) Cash (-A) Debit 7,000 Equality checks: 1. Debits $7,000 equal Credits $7,000, 2. The accounting equation is in balance. 31 Credit 7,000 The balances in the balance sheet accounts and income statement accounts (all income accounts begin with a zero balance). 32 Income Statement 33 Statement of Stockholders’ Equity The net income ($21,800) comes from the Income Statement we just prepared. 34 Balance Sheet 35 Total Asset Turnover Ratio Total Asset Turnover Ratio = Sales (or Operating) Revenues Average Total Assets (Beginning total assets + ending total assets) ÷ 2 Papa John’s Total Asset Turnover Ratio for 2008 (dollars in thousands): $1,132,000 ($402,000 + $386,000) ÷ 2 36 = 2.87...
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